Leveraging Logistics For SME Competitiveness

Today, when small and medium-sized enterprises (SMEs) in India look forward to scaling their operations, they frequently encounter significant hurdles such as an unproven track record, inconsistent order volume commitment, lack of capital and tech-enabled logistics infrastructure. Building initial customer trust is crucial, as it fosters word-of-mouth marketing and repeat business, which is essential for the business to grow and succeed. 

Logistics has been the backbone of eCommerce, with the pandemic accelerating its expansion. The Indian logistics industry, which contributes 14 percent to the GDP, is at the forefront of this transformation. By continuously enhancing operational efficiency and reducing delivery times, couriers play a pivotal role in boosting customer loyalty and satisfaction. 

SMEs contribute significantly to the Indian economy and account for 40 percent of the GDP. However, these businesses get stiff competition from the big players and struggle to identify their competitive edge.  

Moreover, SMEs mostly operate with limited resources which often leads to poorly managed logistics processes. However, making punctual and cost-effective parcel deliveries is crucial for their steady growth and success. Logistics services address these concerns head-on by offering rapid and efficient express delivery solutions. By removing bottlenecks and enhancing delivery efficiency, courier aggregators facilitate trade and contribute to the growth and success of SMEs in a fiercely competitive market. 

The rise of disruptive technology has transformed the logistics sector, with online businesses expected to offer enhanced value-added services to retain and attract new customers. This includes providing multiple delivery options through multiple courier partners to improve customer experience, as the demand for swift and seamless deliveries is more pronounced than ever. 

A key aspect of enhancing the shipping process is addressing Return to Origin (RTO) and Non-Delivery Reports (NDR). Aggregators can assist SMEs by ensuring address confirmation, providing accurate Estimated Dates of Delivery (EDD), and maintaining proactive communication with customers. These steps not only reduce RTO and NDR rates but also improve customer satisfaction. 

Moreover, leveraging the tracking page as a touchpoint for customer engagement can significantly boost brand recall and sales. By displaying customised banners and promotional offers on the tracking page, businesses can effectively cross-sell and upsell their products. When a customer visits the tracking page multiple times, it reinforces brand awareness and encourages repeat purchases. Introducing discount offers or special deals on new orders through these touchpoints can further enhance customer loyalty and drive additional revenue. 

Additionally, managing RTO shipments remains a significant challenge, directly impacting their profit margins. In India, Cash on Delivery (COD) is the preferred payment method for 65 percent of consumers, while the remaining 35 percent opt for prepaid payments. Alarmingly, one in every four COD orders is returned, compared to just one in every 100 prepaid orders. 

Each RTO order means SMEs have to bear both the burden of forward and return shipping costs. Additionally, once a COD shipment is delivered, logistics partners often take 7 to 14 days to remit the collected cash to the SMEs' bank accounts. This delay can severely affect cash flow and business operations. 

Logistics aggregators present a viable solution to this problem. By remitting COD amounts within just 1-2 days, they provide SMEs with quicker access to funds that would otherwise be tied up for extended periods. This prompt remittance can be crucial for maintaining operational liquidity and sustaining business growth. 

Strong logistics systems are essential for a nation to develop into a major export and manufacturing hub since supply chains are spread out across the globe as companies search for the cheapest and most efficient ways to produce and transport goods. Events like the COVID-19 pandemic have only reinforced this belief among Indian exporters and the government to enhance logistics capabilities through digitisation on a mission mode as it targets to be a $5 trillion economy. 

The transformation of the Indian logistics industry is a testament to the significant impact of technological advancements on logistics. By addressing the unique challenges faced by SMEs and offering innovative solutions, courier services are essential partners in the growth and success of small and medium-sized businesses. As the logistics sector continues to evolve, the integration of modern technologies and the focus on efficiency and transparency will drive the future of courier services in India, ensuring that SMEs can thrive in an increasingly competitive market. 

(Raghav Singhal, Founder and Executive Director at RapidShyp.)